November 19, 2008

Recession :: True or False

Perhaps I need to go back to economics class and refresh my memory as to what a recession is exactly. I’m confused.

I’ve been watching the news and it’s all gloom and doom. I deal with business people who are telling me “It’s really grim out there, ya know.” I’ve read about Christie’s and Sotheby’s and how the art market bubble has burst. Talk of deep recession and rumors of depression are plentiful and they are freaking me out.

And yet... imagine if you will...

Two weeks ago, I found I had to purchase a new laptop. Had to, yes! My 4 year old Mac (love of my life) was on its last bank of RAM, the battery lasted for only 20 minutes and the CD/DVD drive no longer worked. I debated and debated about the purchase figuring that perhaps I should bite the bullet and forego the beautiful MacBook Pro with the solid aluminum housing, speedy quick processor, beautiful LED screen and backlit keyboard.... *sigh* We’re in a recession, you know.

Ok... I use my laptop extensively when I’m on the road and not being able to read or burn a CD is kind of a bad thing for a graphic designer. Also the 20 minutes of battery power was quite a problem So off we went to the beautiful Apple store in West Hartford.

The Westfarm’s Mall is lovely. There is Nordstrom, Louis Vuitton, Bailey Banks and Biddle, Brooks Brothers... you get the idea? I entered the Mall thinking that the place would be a ghost town... but au contraire! It was bustling. Men and women strolled here and there with BUNDLES! Seriously! Bundles of packages from all the top stores. The Apple store was packed and happy (yes I bought the new laptop...his name is Henry) and Nordstrom was enjoying quite a rush at the perfume, handbag, and shoe departments.

Surely, this must just be a fluke...

Sunday, I decided to go spend an autumn afternoon at the outdoor Clinton Crossing Premium Mall do to some window shopping for Christmas. Another lovely shopping establishment with a Saks, Barney’s, Ralph Lauren, Movado, etc... Many of these stores have signs in the windows announcing anywhere from 30%-70% off. Again... the place is crowded with strollers and shoppers. The Coach store had no less than 50 people in it and a waiting line at the cashier... I’m not kidding!

Have I fallen into a recession black-hole...twice?

Now I’m not making light of those folks who have lost their jobs or lost their homes. I can’t imagine the fear and pain of that kind of experience. But what the hell is going on here?

Speaking with a client of mine three weeks ago at dinner, I’m told “It’s all media hype, Lisa. In NYC people are still shopping, dining out at all the best and most expensive restaurants. Now is the time to buy!!”

Artist Ted Mikulski, tells me his paintings are selling “like wild fire”. Damien Hirst is lowering his prices due to recession and putting his art on Levi’s. Another client tells me “It seems that there is only a recession when it comes to paying bills.”

Comments

well i freelance in publishing, for those that don't know me, and my main client has stopped using freelancers alltogether. the parent company has very limited funds due to the credit crunch. all discretionary spending has been halted, which includes their freelance budgets. i watch, and read, the news all the time. what you are seeing are people with existing credit cards and (hopefully) fairly secure jobs, spending to their limits. no one is buying large purchases (cars/houses) unless they have a credit score of 700 or more to start with. you are seeing people running up their cards, which honestly, is not smart.

Unemployment has increased to almost 7%, up from less around 4% 6 months ago, and is only headed higher, Citigroup has announce the loss of 53,000 more jobs just yesterday. in september the US lost 159,000 jobs, in October we lost 225,000 more jobs. i won't even go into what may happen with the possible failure of the domestic automakers, which is a very real possibility. suffice it to say if they do, it will make the 1930s look like a bad day at the track.

i would say those shoppers are basically rearranging the deck chairs on the Titanic-trying to maintain a bit of normalcy in a sad time. the economy WILL get worse next year and perhaps even 2010 from everything i've been told by a few big execs of major companies i blog with on other sites.

i'm virtually penniless now, so i'm not sure how much worse it can get for me... but i'll be selling antiques that have been in the family for centuries pretty soon. : ) always the optimist...

I like your honest observation about how people are still shopping. I know someone who was just in the Aston-Martin showroom in Greenwich and he said all the cars are SOLD. We are being lied to by the media. Pick your conspiracy, but it is readily apparent that things are not the way we are being told they are.

high end items like luxury cars, mansions etc, are pretty much immune in times like this. i don't mean affordable luxury cars like a Lexus, i'm talking about the aforementioned Aston Martins. Rolls Royces, Ferraris. Homes larger than 12,000 sq ft are selling well still. why? the richest of the rich are immune. Bush has taken care of his high-end boys and girls. What does it matter if your stock portfolio loses 25% if it's more than $150million? it's a fact that Toyota sales are down almost 40%. Ford sales are down almost 40%. Lexus is down almost 50%. No affordable carmaker is posting anything close to the sales with last year.

look at the number of foreclosures. there were 59,000 in California last month, and that was down from more than 100,000 the month before, but only because of a 30 day moratorium on foreclosures. anyone that thinks this is a media-driven problem isn't facing facts: China's economy has lost more than 60% in the last year. Hong Kong is down more than 50%. Japan is down more than 40%. the US economy is down more than 40% since last year. that means we have lost almost half of our net worth!!! and who has lost the most? when you consider the fact that the vast majority of businesses in the USA are considered "small" businesses, it is the common person that is losing the most, not the rich, fat cats. People buying Bentleys will continue to buy them. People buying Chevys not so much.

American Express is raising their interest rates on all of their customers, while lowering their credit limits. People that pay every bill on time, with great credit ratings are having their interest rates raised as i write this. this IS bad, and is only getting worse! in the past 2 days, TWO DAYS, the stock market has lost almost 10% in net worth, and the credit markets have frozen again. the last 2 days!
'
this is not a time to fiddle while Rome is burning. it's a time for some gosh darn leadership at every level.

Our elected officials have failed us miserably and we have let it happen.

People like Barney Franks who was never taken to task for his boyfreind running a illegal prostituion scheme in an apartment paid for by tax dollars. The mayor of D.C. on crack....George W. Bush failing our troops miserably AND running an illegal undeclared war. On & on & on...when is enough, enough???

Hi Lisa - I really enjoy your astute observations. Are there any further articles to read on Ted Mikulski? He's an interesting figure in the art world right now. If only in a small area, his youth and energy are amazing and exciting

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